Wednesday, September 6, 2006

Hailey businesses adjusting to LOT

July tax returns positive, Hailey treasurer says

Express Staff Writer

The transition to collecting additional taxes due to the May 23 passage in Hailey of a local option tax has been a largely simple one, the general manager of Hailey's Wood River Inn, Gene Olson, left, said last Friday. Under the new Hailey LOT, the city will collect taxes of various percentages on rental car and hotel room rates, liquor by-the-drink and restaurant sales. Photo by Willy Cook

For those Hailey businesses that now must collect additional taxes under the city's new local option tax passed by voters May 23, the transition to added bookkeeping and other tax-collection-related tasks has been largely straightforward and simple.

"It was a big non-issue," said Peter Scheurmier, who operates the Avis Rent-A-Car franchise at Friedman Memorial Airport in Hailey. "It was very smooth."

Starting July 1, a number of select Hailey businesses were required to begin collecting additional taxes under the city's new LOT ordinance.

The May 23 vote on the LOT ballot issue drew a slightly higher than normal number of voters to the polls as compared to previous primary elections.

Altogether, some 877 Hailey residents out of the city's 3,385 registered voters went to the polls. When it was all said and done, the yes votes authorized the LOT's passage by a significant 597-to-268-vote margin.

Under the Hailey LOT, the following taxes must be collected by these types of businesses:

· A rental vehicle tax of 3 percent. 

· A hotel and motel room tax of 3 percent. 

· A liquor by-the-drink tax of 2 percent.

· A restaurant tax of 1 percent.

On Aug. 28, Hailey City Clerk and Finance Treasurer Heather Dawson discussed with the City Council the city's July LOT returns, which had just begun to arrive in the mail at City Hall.

At first glance, the early returns look positive, Dawson reported. With only 68 percent of the returns from Hailey businesses tabulated in time for the meeting, the city had already taken in a total of about $41,000, she told the council.

Although a local option tax committee established by Hailey Mayor Susan McBryant originally predicted that annual LOT returns would total some $325,000, Dawson cautioned against expecting more than that despite the high July returns.

"I don't think our revenue will be that high every month," she said.

For most rental car companies operating in Hailey, the changeover was likely an easy one, Avis Rent-A-Car's Scheurmier said. "We're all highly computerized," he said.

In his case, the corporate headquarters for Avis takes care of the taxes for all of its franchisees. On the ground, the changeover was as simple was a modification to their computer programs at midnight on July 1.

"Avis submits all the taxes," Scheurmier said. "We own the business, but they do all the (tax) stuff."

This is largely the case industry-wide, he said. "I think that's the case for everybody."

Even in the case of customers, the changeover was largely a non-issue, too, Scheurmier said.

"The only impact was people raising their eyebrows," he said of his customers. Explaining, Scheurmier said a large majority of his customers call in months in advance to reserve a rental car.

Many of his recent customers, including the few who asked for an explanation of the higher tax, likely made reservations before the May 23 passage of the Hailey LOT, he said.

After being given an explanation, no one was overly angry about the added charge on his or her bills. "There was nobody that was particularly irate," he said.

Like Scheurmier, Gene Olson, the general manager of the Wood River Inn in Hailey, believes the transition required of his business due to the LOT was a smooth one.

"It has been seamless. It was a push of a button for us," Olson said. "We popped it (the added tax) in the computer and that's the last we've heard of it."

And unlike what he had expected, the response from his customers to the additional tax has been one of near silence, too, Olson said.

"I haven't had a negative response from it at all," he said. "I haven't had one person."

It's been the responsibility of the Wood River Inn's controller to handle the added taxes, Olson said. Hotels in Hailey already had to charge a 7 percent room tax before the LOT went into effect.

The change only required the inn's controller to up that tax by 3 percent to a 10 percent tax assessment per room, Olson said.

"I assume it was the same paperwork," he said. "It's just a different percentage."

If the response from at least one restaurant owner in Hailey is any indication, however, not all businesses required to collect the new taxes have experienced as smooth of a transition.

While the changeover was largely simple from a business perspective, the impact on their customers hasn't been entirely benign, said Jennifer Swartz, who along with her husband, Larry Swartz, owns daVinci's, an Italian restaurant downtown.

"It's been a little bit confusing to some customers," Swartz said of the added tax on their bills.

From the beginning, she and her husband have been opposed to the tax because they cater to a largely local crowd. Up to 80 percent of their business are locals, she estimated.

"I can see the car rentals and the hotel rooms," she said. "I just don't see how the tax is appropriate for us."

Even their marketing is directed at local customers. "We don't deal with a whole lot of tourists," she said.

Still, the changeover has gone as good as could be expected.

"It wasn't a big deal," Swartz said. "It was a little more work on our part."

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